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GE, seven other industrial stocks could get hit hard by lower oil prices

Nov. 28, 2018 7:07 PM ETIngersoll Rand Inc (GDI) StockGE, EMR, HON, KMT, ENOV, GDI, NVT, FLOWBy: Carl Surran, SA News Editor41 Comments
  • A continuing drop in the crude oil price could force the companies that find oil and drill and operate wells to cut back their capital spending, which would be especially bad news for firms that depend on those upstream companies for their sales.
  • Barclays analyst Julian Mitchell notes some stocks that could take a beating as a result: The oil and gas industry represents ~35% of revenue for Gardner Denver (NYSE:GDI) and nearly 25% for Emerson Electric (NYSE:EMR), while SPX FLOW (NASDAQ:FLOW), Kennametal (NYSE:KMT), Colfax (NYSE:CFX), Honeywell (NYSE:HON), nVent Electric (NYSE:NVT) and General Electric (NYSE:GE) all get 15%-20% of their revenue from oil clients.
  • In a protracted oil market downturn similar to 2015-16, when WTI crude tumbled more than 70% from peak to trough, Mitchell estimates GDI, EMR and FLOW are at risk of a cut in their 2020 earnings of at least 30% while GE could be 10% lower.

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